Skip to main content

It is upto the bank to recover money from guarantor or borrower: NCDRC

The national consumer commission has dismissed a man's plea filed against a bank which recovered from him the dues, borrowed by a person whom he had introduced to it, saying that "it is the choice of bank to recover money either from the guarantor or the borrower".

National Consumer Disputes Redressal Commission (NCDRC), presided by Justice J M Malik, dismissed the complaint filed by Kerala resident R S Vasan against Canara Bank, while rejecting his contention that he was not a guarantor and that for the recovery, the bank should have first approached the family of the borrower who had died.

"It is well-settled that it is the choice of the bank to recover the money either from the guarantor or the borrower. It is abhorrent from the principles of law to say that the bank must first of all recover the money from the borrower and thereafter it can proceed against the guarantor," NCDRC said. It passed the order while hearing a revision petition filed by the bank against Kerala State Consumer Commission, which had directed it to pay Rs 1,49,698 to Vasan.

The district forum, too, had decided the case in Vasan's favour. NCDRC reversed both the orders passed by the lower foras. NCDRC, while rejecting Vasan's claim that he had no intention to be a guarantor, said that he had signed the blank papers at his own peril. "The complainant signed the blank papers, if any, with his open eyes and on his own volition. Even if he has signed the blank papers, he did it at his own peril," it said.

Vasan had told the district forum that he introduced C K Prabhakaran to the bank on June 22, 1996, which extended Rs one lakh to him (Prabhakaran) against immovable property. He said that he had no intention to be a guarantor or a surety for the overdraft facility given to Prabhakaran, but he was made to sign some blank papers. He said that Prabhakaran died on June 7, 2001, and the bank informed Vasan on June 22, 2003, that overdraft facility had been given on his (Vasan) surety and a sum of Rs 1,36,135.50 could be liquidated against his term deposit. Vasan, however, immediately replied denying his liability.

In the meantime, the bank issued another letter mentioning the amount due as Rs 1,45,799.30. Subsequently, it informed Vasan that the amount under overdraft had been adjusted against his term deposit. The district forum, however, had asked the bank to pay Vasan Rs 1,48,698 and also to pay Rs 1,000 as costs. The state consumer commission dismissed the appeal, filed by the bank against the forum's order, with Rs 5,000 as costs.

Article referred: http://www.dnaindia.com/money/report-it-is-upto-the-bank-to-recover-money-from-guarantor-or-borrower-ncdrc-2017218

Comments

Most viewed this month

The recovery of vehicles by the financier not an offence - SC

Special Leave Petition (Crl.) No. 8907  of 2009 Anup Sarmah (Petitioner) Vs Bhola Nath Sharma & Ors.(Respondents) The petitioner submitted that  respondents-financer had forcibly taken away the vehicle financed by them and  illegally deprived the petitioner from its lawful possession  and  thus,  committed  a crime. The complaint filed by the petitioner had been  entertained  by  the Judicial Magistrate (Ist Class), Gauhati (Assam) in Complaint Case  No.  608 of 2009, even directing the interim custody of the vehicle (Maruti  Zen)  be given to the petitioner vide order dated  17.3.2009.  The respondent on approaching the Guwahati High  Court against this order, the hon'ble court squashed the criminal  proceedings  pending   before  the  learned Magistrate. After hearing both sides, the Hon'ble Supreme Court decided on 30th...

Flat owner without legal title has consumer rights

In a significant judgment, the South Mumbai Consumer Forum has held that a flat owner legally occupying the flat would be a consumer, even if his title to the flat might be in dispute before a competent court. Thurlow owned a flat in a co-operative society. Appuswami was residing with him. In 1976, Appuswami got married in the same flat, and his wife started residing in the same flat. They had three children, born and brought up in the same flat. After Thurlow expired in 2004, Appuswami approached the High Court for inheritance to Thurlow's estate but expired while the matter was pending. His wife and children were brought on record. Subsequently, the society intervened, contending Appuswami did not have any right to the flat and it should be handed over to the Society. The Appuswami family continued to reside in the flat, and even pay the society's outgoings and maintenance charges. Later, the society stopped collecting maintenance charges from all members, as it earned...

NCLT - Mere admission of receipt of money does not qualify as a financial debt

Cause Title : Meghna Devang Juthani Vs Ambe Securities Private Limited, National Company Law Tribunal, Mumbai, CP (IB) No. 974/MB-VI/2020 Date of Judgment/Order : 18.12.2023 Corum : Hon’ble Shri K. R. Saji Kumar, Member (Judicial) Hon’ble Shri Sanjiv Dutt, Member (Technical) Citied:  Carnoustie Management India Pvt. Ltd. Vs. CBS International Projects Private Limited, NCLT Swiss Ribbons Pvt. Ltd. & Anr vs. Union of India & Ors. (2019) Sanjay Kewalramani vs Sunil Parmanand Kewalramani & Ors. (2018) Pawan Kumar vs. Utsav Securities Pvt Ltd 2021 Background Application was filed under section 7 of the Insolvency and Bankruptcy Code, 2016 alleging loan of Rs, 1.70 cr is due. The Applicate identified herself as the widow and heir of the lender but could not produce any documents proving financial contract between her Late husband and the CD but claimed that the CD has accepted that money was received from her husband. The applicant subs...